Recently RBI has revised the limits for Ways and Means Advances WMA which of the following statement...........

Economic Affairs Money Supply and Monetary Policy

Recently RBI has revised the limits for Ways and Means Advances (WMA), which of the following statement is correct regarding WMA?

1. It temporary loan facility provided by the RBI to the Centre only

2. Interest rate for WMA is currently charged at the repo rate.

3. It also provide overdraft Facility to the Central Government.

Choose the correct statement using the code below:

Only 1

2 and 3 only

1 and 3 only

1, 2 and 3

छोटे Courses बड़े Results

Master Money Supply and Monetary Policy

Prepare through Micro-courses

Try Now

Explanation:

Ways and Means Advances is the temporary loan facility provided by the RBI to the centre and state governments. The WMA scheme was introduced in 1997 to meet any temporary mismatches in the receipts and payments of the government.

The WMA needs to be vacated after 90 days. The interest rate for WMA is currently charged at the repo rate. The limits for WMA are decided by the RBI and in consultation with the Government of India.

When the WMA limit is crossed the government takes recourse to overdrafts, which are not allowed beyond 10 consecutive working days. The interest rate on overdrafts would be 2 percent more than the repo rate.